Clunkers is tied up in a much larger fight over a clean energy bill.
House Democrats from the Committee on Energy and Commerce have finally agreed a compromise bill that would provide billions of dollars in taxpayer-financed incentives to vehicle buyers who trade in older vehicles for new ones. Buyers would receive a coupon, worth $3500 or $4500, if the new vehicle is more fuel efficient than the one replaced.
The program could cost taxpayers as much as $4.5 billion during the year it would run, if all one million of the authorized coupons are cashed in. The money would come from the economic stimulus plan already approved by Congress.
The bill does not, apparently, require any financing from the very automakers that would benefit the most from it. A similar program in the United Kingdom requires an automaker match, as TDB has reported. And unlike earlier versions of the bill, all vehicles built in the U.S. would be covered.
Still, many details need to be worked out; and as many questions remain about the soundness of the bill, as do obstacles to its passage: For example, does U.S. built mean that, or would it include vehicles built in Canada and Mexico under the North American Free Trade Agreement? Are imports really ineligible? Would high-priced luxury vehicles be covered? What of used cars that are fuel efficient, could the vouchers used for their purchase?
Obvious opponents include the American International Automobile Dealers since it has advocated scrappage legislation that includes all nameplates retailed in the U.S. And various aftermarket groups comprised of independent repair shops and parts makers have also vigorously opposed earlier versions of scrappage bills.
The real core issue is what happens to the vehicles traded in? If improving emissions and fuel economy are the goals – shouldn’t the clunkers then be scrapped so that they do not return to the roads and negate its stated purpose? Some proposals have included a scrappage requirement, but would allow dismantlers to resell some components before vehicles are crushed or shredded, thereby extending life of other clunkers on the road.
The stage is now set for another act of “Democrats propose, Republicans object with no alternative plan” that has been playing since the 111th Congress convened last January. This battle will take place, at first, in the House Energy and Commerce Committee, Chaired by Democrat Henry Waxman, which has 23 hostile Republican members, who thus far are not supporting the much larger and much more contentious “The American Clean Energy and Security Act of 2009” that the trade-in program is attached to. The clunker bill could be detached and proposed as free-standing piece of legislation if the gridlock continues, as Democrats have threatened.
This latest agreement on a “cash for clunkers” bill was announced yesterday by Chairman Waxman, Subcommittee Chairman Edward Markey, Chairman Emeritus John Dingell, Congresswoman Betty Sutton, Congressman Jay Inslee, and Congressman Bart Stupak. They claimed this “will help the auto industry while cleaning our air.” The agreement is based on H.R. 1550, introduced by Congresswoman Sutton, and H.R. 520, introduced by Congressman Inslee.
How the details are completely worked out between both earlier House bills remains to be seen. And the devil will definitely be in the details: H.R. 1550, for example, limited the program to new vehicles built in the U.S. costing under $35,000, and required that the trade-ins be crushed. H.R. 520 had vouchers worth from $1,000 to 3,000 that could be applied to the purchase of used cars, and its coupon program ran for four years. No wonder than that automaker support statements have been couched in carefully worded “as we understand it” statements.
Similar legislation has also been proposed in the U.S. Senate, and, if approved, the Senate bill would have be reconciled with the House bill by a conference committee. So those looking for quick action on cash for clunkers might be waiting a while for coupons to appear.
Latest Clunker Proposal
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Passenger Car |
Light-Duty Truck |
Light-Duty Truck (6,000 – 8,500 lbs) |
Work Truck (8,500 – 10,000 lbs) |
|
Minimum Fuel Economy for New Vehicle |
22 mpg (EPA combined) |
18 mpg (EPA combined) |
15 mpg (EPA combined) |
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$3,500 Voucher |
Mileage improvement of at least 4 mpg |
Mileage improvement of at least 2 mpg |
Mileage improvement of at least 1 mpg or trade-in of a Work Truck. |
Trade-in must be at least pre-2002 |
|
$4,500 Voucher |
Mileage improvement of at least 10 mpg |
Mileage improvement of at least 5 mpg |
Mileage improvement of at least 2 mpg |
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I drive a Ford Focus 2005 that gets 25 mpg. The new 2009 Focus gets 27 mpg. The 4 mpg better rule means I will have to downsize to something else, which is very hard to do when I am already in a small car.
Its easy to downsize from a big Lincoln. Not from a Focus.
Washington, DC, May 7 – U.S. Senators Debbie Stabenow (D-MI), Sam Brownback (R-KS), and Carl Levin (D-MI) today made the following statements regarding bipartisan fleet modernization legislation.
“After weeks of hard work with the Obama administration and members of Congress, I am pleased to join with a bi-partisan group of Senators to announce a fleet modernization bill that will help provide a much-needed boost to our auto industry during these tough economic times,” said Senator Stabenow. “This program will stimulate auto sales by providing vouchers to bring people back into dealer showrooms. Bottom line- this legislation will help save good-paying jobs in Michigan while removing less fuel-efficient vehicles from the road at the same time. I look forward to introducing this bi-partisan legislation soon.”
“I’m excited about the bipartisan legislation that my colleagues and I will soon introduce” said Senator Brownback. “This bill will give a big boost to the struggling economy by directly giving citizens money from the stimulus package. The auto industry will also greatly benefit from the legislation as consumers trade in their older, less fuel efficient vehicles for new models. Finally, it’s important to note that the bill is responsibly financed by money already allocated through the stimulus package and will not require funding through additional deficit spending.”
Senator Levin said: “Our economic downturn has taken a heavy toll on new vehicle sales of all auto companies. It is imperative that we find incentive programs such as this one to turn around the sales decline and help U.S. auto companies survive the downturn, while helping the environment at the same time.”
Press Release:
Stabenow, Brownback Introduce Drive America Forward Act to Provide Boost to Auto Sales, Save Jobs
Washington, DC 21 May 2009 – U.S. Senators Debbie Stabenow (D-MI) and Sam Brownback (R-KS) today introduced the Drive America Forward Act (S.1135). The bill will save jobs and help remove less-efficient cars from the road. Once signed into law it will provide consumers with a voucher to help pay for the purchase or qualified lease of a new, more efficient vehicle. Similar legislation was recently introduced in the House.
“After months of hard work with the Obama Administration and members of Congress, I am pleased to join with a bipartisan group of Senators to introduce legislation that will provide a much-needed boost to our auto industry during these dark economic times,” said Stabenow. “This bill is a win-win for Michigan and the country. Not only will we provide incentives to bring people back into dealer showrooms, but we will remove less fuel-efficient vehicles from our roads helping to reduce pollution in our environment and preserve our way or life. Bottom line, this legislation will help stimulate new car and truck sales, saving good-paying jobs in the process.”
“The bipartisan legislation introduced today by Senator Stabenow and me will give the American economy a much-needed boost by giving money from the stimulus package directly to citizens,” said Brownback. “The legislation will also give a great boost to the struggling auto industry. It’s important to note that the bill is responsibly financed by money already allocated through the stimulus package and will not require funding through additional deficit spending.”
Consumers may trade in their older vehicles and receive vouchers worth up to $4,500 toward the purchase or qualified lease of a new, more fuel-efficient car or truck. The program will be authorized for up to one year and provide for approximately one million new car or truck purchases. The legislation divides these new cars and trucks into four categories.
The mpg values are EPA combined city/highway fuel economy as posted on the window sticker of new vehicles and can be found at fueleconomy.gov.
The trade-in vehicles must:
• Be in drivable condition
• Be continuously insured and registered to the same owner for at least one year
• Have a combined fuel economy value of 18 mpg or less (Work trucks must be pre-2002 regardless of mpg)
• Not be more than 25 years old with historic or aesthetic value. These vehicles are valued by hobbyists or are a valuable source of restoration parts.
Funding: Redirected recovery funds identified by the Obama Administration for this purpose
Length: One year—from March 30, 2009 to 12 months after the rules have been implemented. Retroactive for a $3,500 voucher if the owner can prove that the person was the registered owner
and can prove that the vehicle was scrapped in accordance with the requirements in the program.
New vehicles
• The new vehicle must have a manufacturer’s suggested retail price of less than $45,000
• Passenger Cars: The older vehicle must get 18 mpg or less. New passenger cars with mileage of at least 22 mpg are eligible for vouchers. If the mileage of the new car is at least 4 mpg higher than the old vehicle, the voucher will be worth $3,500. If the mileage of the new car is at least 10 mpg higher than the old vehicle, the voucher will be worth $4,500.
• Small Trucks and SUVs: The old vehicle must get 18 mpg or less. New small trucks or SUVs with mileage of at least 18 mpg are eligible for vouchers. If the mileage of the new truck or SUV is at least 2 mpg higher than the old vehicle, the voucher will be worth $3,500. If the mileage of the new truck or SUV is at least 5 mpg higher than the old vehicle, the voucher will be worth $4,500.
• Large Light-Duty Trucks: The old vehicle must get 18 mpg or less. New large trucks (pick-ups and vans weighing between 6,000 and 8,500 pounds) with mileage of at least 15 mpg are eligible for vouchers. If the mileage of the new truck is at least 1 mpg higher than the old truck, the voucher will be worth $3,500. If the mileage of the new truck is at least 2 mpg higher than the old truck, the voucher will be worth $4,500.
• Work Trucks: Under the agreement, consumers can trade in a pre-2002 work truck (defined as a pick-up truck or cargo van weighing from 8,500-10,000 pounds) and receive a voucher worth $3,500 for a new work truck in the same or smaller weight class. Only 7.5 percent of the total funds can be used for vouchers for the purchase or lease of a work truck. There are no EPA mileage measures for these trucks; however, because newer models are cleaner than older models, the age requirement ensures that the trade will improve environmental quality. Consumers can also “trade down,” receiving a $3,500 voucher for trading in an olderwork truck and purchasing a pick-up or van weighing between 6,000-8,500 lbs.
The bipartisan legislation is cosponsored by Senators Durbin (D-IL), Voinovich (R-OH), Levin (D-MI), Brown (D-OH), Mikulski (D-MD), and Lieberman (I-CT).
What real impact does these environmental initiatives have? Based on hard science.
The proposition that removing older vehicles from the road is sound, since they pollute much more than newer ones. Confounding influences are increases in the vehicle fleet and population growth. Don’t look for science in this bill. This is a political gesture.
Unfortunatly, the republican half of the bi-partisan group that President Obama is referring to does not truly represent their constituents. Many private business owners and self employed taxpayers are affected negatively because of this bill. In my understanding, part of the measure includes the prohibit selling of used engine blocks and drivetrains back to the public.
This would have an adverse impact on the people whose business depends on repairing and restoring veihicles. Not to mention the the owners and employees of salvage yards across the country.
In my educated opinion, politics, not hard science, are behind the motives of the senators and congress people authoring this bill. The Automotive coorparations do not share the burdon, but in fact, benefit much from the pricey incentives.
Taxpayers take the full reponsibility as the $3,000 and up vouchers are part of the stimulus package.
My question is, are vouchers and rising gas prices enough to influence american consumers into purchasing smaller and potentially more vulnerable veihicles. And with the declining employment rate, is this really worth the “sacrifice” the many people that would lose their income because of this measure?